Credit Guarantee Scheme Quiz

The Trust guarantees loans to eligible borrowers provided by a member lending institution, up to certain limits depending on the type of institution.

A credit facility is a loan, line of credit, or other financial arrangement that allows a borrower to access funds.

Public Sector Banks, Private Sector Banks, Foreign Banks, and select Financial Institutions can provide loans up to ₹500 lakh under the scheme.

Small Finance Banks (SFBs), Regional Rural Banks, State Financial Institutions, and Urban Co-operative Banks can provide loans up to ₹200 lakh under the scheme.

Microfinance Institutions can provide loans up to ₹50 lakh under the scheme.

The Credit Guarantee Scheme of CGTMSE requires the Trust to guarantee loans provided by member lending institutions to businesses in the Micro and Small Enterprises sector.

Under the Credit Guarantee Scheme, borrowers can access incremental credit facilities up to the maximum cap of ₹500 lakh. This means that the amount available for loans can increase as their outstanding debt decreases.

The CGTMSE guarantees cover credit facilities extended to eligible borrowers in the Micro and Small Enterprises sector without requiring collateral security or third party guarantees.

A program aimed at supporting Micro & Small Enterprises (MSEs) by providing credit guarantee and financial assistance.

A specific category within CGTMSE that focuses on supporting women entrepreneurs, SC/ST individuals, and persons with disabilities (PwD).

A benefit offered within the CGTMSE scheme that grants a 10% discount on the annual guarantee fee for businesses classified as micro and small enterprises (MSEs).

A category within CGTMSE that offers a 10% discount on the guarantee fee for MSEs located in regions like the North East (including Sikkim), aspirational districts, and credit deficient districts.

MSEs that have received certification for their commitment to environmental sustainability and efficient resource usage.

A type of discount offered within CGTMSE where businesses that qualify for multiple categories of support (social, geographic, MSE status) can receive a maximum discount of 30% on the guarantee fee.

A specific risk premium applied to new or less experienced Micro Loan Institutions (MLIs) participating in CGTMSE, requiring MLIs to pay a higher risk premium for a year.

An annual process where the risk classification of participating Micro Loan Institutions (MLIs) is reviewed and adjusted based on their performance and risk history.

The total amount of the loan that the CGTMSE guarantees for a specific borrower. This is the amount used to calculate the annual guarantee fee.

The fee paid by the lending institution to the CGTMSE for guaranteeing the loan. This is calculated based on the outstanding amount of the loan and a fee rate, which is determined by the risk level of the loan.

The outstanding amount of the loan at a specific point in time. This is the amount that is used to calculate the AGF for term loans.

The amount that is expected to be outstanding at a specific point in time. This is used to calculate the AGF for working capital loans.

A model where the guarantee fee is based on the outstanding amount after the collateral (assets pledged as security for the loan) value is subtracted. This model is used for Hybrid Security Model loans and can result in lower annual guarantee fees.

The date when the lending institution must update the CGTMSE on the outstanding amount of the loan for working capital and term loans. This is used to calculate the AGF for the following year.

The date when the lending institution is required to pay the first year's guarantee fee to the CGTMSE. This is either 30 days after the first disbursement of the loan or 30 days after receiving the CGTMSE's demand advice for the guarantee fee, whichever date is later.

The date when the lending institution is required to pay the annual guarantee fee (excluding the first year's fee) to the CGTMSE. This is typically generated in the second week of February every year.

Regional Rural Banks (RRBs) must have a Capital to Risk (Weighted) Assets Ratio (CRAR) of at least 9%, Non-Performing Assets (NPAs) below 5% of advances and no regulatory defaults. They must also be deemed "Sustainably Viable" or "Currently Viable" by NABARD.

Small Finance Banks (SFBs) must be scheduled, have a minimum net worth of ₹100 crore, an external credit rating of BBB or above and adhere to RBI's Capital to Risk (Weighted) Assets Ratio (CRAR) requirements. They must also have shown a profit for three consecutive years as Non-Banking Financial Companies (NBFCs).

Scheduled Urban Co-operative Banks (SUCBs) must have a minimum Demand & Time Liabilities (DTL) of ₹750 crore for a year, a CRAR of 12%, continuous net profit for three years, Gross NPAs of 5% or less, compliance with CRR/SLR requirements and no major regulatory concerns.

Non-Scheduled Urban Co-operative Banks (NSUCBs), State Co-operative Banks (StCBs), and District Central Co-operative Banks (DCCBs) must have a CRAR of 9%, show a profit in the last fiscal year, have Gross NPAs of 5% or less, comply with CRR/SLR requirements, and have no major regulatory concerns.

State Financial Corporations (SFCs) must have a positive net worth, a CRAR of 12%, Gross NPAs of 10% or less, and no overdue payments to SIDBI.

A Microfinance Institution (MFI) must have been actively involved in microfinance operations for at least three years.

Increased credit guarantee coverage for MSEs located in areas where credit is scarce. This means they receive an extra 5% guarantee on top of the standard coverage.

The minimum capital adequacy ratio (CRAR) required for an MFI to qualify for registration is 15%. This means the MFI must have a certain percentage of capital compared to its risk-weighted assets.

The maximum debt-to-equity ratio allowed for an MFI to be registered is 10:1. This means the MFI can borrow up to 10 times its own capital.

An MFI's portfolio at risk (PAR) should be less than 5% for accounts that are over 90 days delinquent. This indicates the percentage of loans that are considered risky or at risk of default.

To qualify for registration, an MFI must have assets worth a minimum of `100 crore (1 billion Rupees). This requirement ensures substantial financial resources.

The fee rate for a guarantee of `10 lakh depends on the MLI's risk category. For a standard rate with a 15% risk premium, the fee rate would be 0.43% of the guarantee amount.

If an MLI has a lower risk profile, it may receive a discount on the standard fee rate. For example, a 10% discount would result in a fee rate of 0.33% for a `10 lakh guarantee.

A situation where the CGTMSE program offers extended credit guarantee coverage for certain types of businesses. For a 75% guarantee coverage, MSEs situated in ICDDs receive an additional 5% coverage, reaching 80%. Similarly, the coverage increases by 5% for 80% and 85% coverage.

MLIs providing guarantees to women entrepreneurs may have a lower fee rate due to government support programs or risk mitigation strategies. For example, a guarantee of `10 lakh might have a rate of 0.38%.